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Mr. BISON. Because we felt that business people ought to have a way open to them to find out ahead of time whether a proposed activity is legal or illegal, rather than to have to run the risk of going ahead and later on finding that it is illegal, and then face the cost of defending themselves.
So we do support, and still support, the procedure for giving business people an advisory opinion on practices or conduct that they are contemplating undertaking.
Mr. McCULLOCH. You generally subscribe then to the theory that a businessman had better be faced with certainty even though at times it may be an unhappy certainty, rather than to proceed in the dim, semidarkness of uncertainty, when the purpose may be good but yet he might later be hauled before the bar of justice and penalized. Mr. BISON. Yes, we would.
Mr. McCULLOCH. And I feel generally the way you do, and I am trying to find out how we can throw further safeguards around advisory opinions.
I note you called this an ex parte proceeding. Do you believe that by its very nature that it must be an ex parte proceeding in the field in which it is to be effective?
Mr. BISON. Generally yes, Judge McCulloch. I would say yes because of the reason that if you are going to have a public hearing, and invite everyone interested in this matter, I think the procedure would be very long, and you would finally get back to the procedure that is ordinarly followed.
Therefore I think that the ex parte proceeding is not necessarily wrong if the opinion expressed, the advisory opinion expressed, is stated and promulgated in a way to make it very, very clear to anyone reading it
Mr. McCULLOCH. That it is only the law or the opinion of the case under the facts as they exist in that case and the law at that time. Mr. BISON. Precisely.
Mr. McCULLOCH. This may be a bit of repetition, the answer to this question, but I want to be sure about it.
If these proceedings were of an adversary nature, they would in most instances almost be as lengthy as an adversary case in the Federal court, would they not?
Mr. BISON. Yes.
Mr. McCULLOCH. And for that reason the very worthwhile purposes of an advisory opinion or the possibility of getting one would be lost. Mr. BISON. May I say this. Judge. Certainly Chairman Dixon and the members of the Commission are to be congratulated for the efforts they have made over the past 2 years or more in advising business people ahead of time so they can avoid violations.
They have published many guides, trying to get people to voluntarily follow the law, without long litigation and legal processes. I think they should be commended and congratulated for their efforts. We heartily support them and have supported them.
Mr. McCULLOCH. I noted you were present this morning at the hearings, and that you were listening intently to the testimony of the chairman.
Do you believe that he made it reasonably clear, if not crystal clear, that he intended this advisory opinion to be limited only to the facts
of the case and the law of this case as it is undertsood from the various decisions unmodified and unreversed?
Mr. BISON. He so stated.
The CHAIRMAN. Counsel, do you have a question?
Mr. MITCHELL. Mr. Bison, in paragraph 2 of the Federal Trade Commission's opinion it is stated:
In this connection it is the Commission's opinion that the group publication of an advertisement containing any selling prices raises a serious question that the members have agreed to and will sell at those prices.
Do you feel that carries a warning to the entire industry on this type of thing instead of just this one specific case?
Mr. BISON. I would say this. I think we would have to read that opinion as an entire document, and relate every sentence to the entire document, and if we read the entire document, and especially after the chairman's testimony here this morning, we should realize that the comments there related to a specific proposal. Therefore as a representative of the food industry, I would say that that opinion has no relation to the food industry. That is our position.
That is what we are going to maintain because, as I said before, we have had nothing to do with the proceeding, and as far as we are concerned, the advisory opinion applies to somebody else. It doesn't apply to us.
Mr. McCULLOCH. Will the gentleman yield for one question? The retail food industry in many of its aspects is essentially different than, for instance, the retail drug industry which sells everything from shoes to ships and ceiling wax, and a prescription drug.
Mr. BISON. That is true.
Mr. McCULLOCH. That could have a very important bearing, could it not?
Mr. BISON. Yes, it could.
Mr. MITCHELL. These instances you speak of, over 30 years of advertising, I believe it may be clear in your statement, but I'm not sure. Are these instances wherein prices are listed?
Mr. BISON. Yes, prices are listed.
Mr. MITCHELL. Where prices are listed?
Mr. BISON. Yes.
Mr. MITCHELL. Would there be any benefit to advertising jointly without listing prices?
Mr. BISON. Very little.
Mr. MITCHELL. And I believe you think it would be a death knell to the independent retail grocers if they were prohibited from doing this? Mr. BISON. Yes.
Mr. MITCHELL. That is all.
The CHAIRMAN. Thank you, Mr. Bison.
We are going to call Mr. Serrill now. I don't believe his statement is very long.
Mr. Kintner's we have noted is a longer statement. We have 20 minutes or more before Mr. Loevinger is scheduled. Is Mr. Serrill in the audience? Mr. Serrill, will you please come forward and take a seat. Give the reporter your name and whom you represent. You may proceed. The committee will be most pleased to hear you.
TESTIMONY OF THEODORE A. SERRILL, EXECUTIVE VICE PRESIDENT, NATIONAL EDITORIAL ASSOCIATION
Mr. SERRILL. Mr. Chairman and gentlemen, my name is Theodore A. Serrill. I am executive vice president of the National Editorial Association, and general manager of its headquarters office in Washington, D.C. My appearance here today is on behalf of NEA, whose membership includes about 5,575 weekly and 608 daily newspapers published in all of the 50 States. NEA represents in Washington 40 States and regional newspaper publisher organizations.
For example, sir, we represent the Tennessee Press Association in your home State. I will have the privilege of speaking there with my president in June, and we have very close contacts with all the State associations.
The CHAIRMAN. Give my regards to them.
Mr. SERRILL. Thank you.
Among other services NEA provides to its members and affiliated associations is a weekly legislative report from Washington. The subject of this hearing, the recent Federal Trade Commission ruling on price advertising by groups of small retailers, has already been reported in our newsletter and in many cases our bulletin items are reproduced in membership bulletins published by State or regional press associations. Thus NEA is the source of information on Federal Government matters affecting the press for newspaper publishers throughout the Nation.
In addition to the newsletter service, NEA publishes the National Publisher, which is a magazine on newspaper management affairs, and we carry matters of this nature in that publication.
In addition to that, we publish a weekly newspaper, the Publishers Auxiliary, for the trade which also reproduces material of this nature, so I would say that our membership is fairly well informed regarding what has transpired, both on report of the Federal Trade Commission and the Justice Department.
It is fitting that the National Editorial Association should be invited to participate in a hearing of the House Small Business Committee. More than 80 percent of NEA members are small businessmen and women, by any definition. A typical NEA weekly member owns and operates a weekly newspaper of about 2,800 circulation. A typical daily member publishes a daily of about 9,000 circulation in a small city.
As a trade association, NEA must live under the antitrust laws and cannot be concerned with advertising rates charged by its members. Each publisher sets his own rates without reference to NEA. Nor does NEA give legal advice to its members. I am not a lawyer and am testifying as a layman and not as an expert on the antitrust laws.
NEA is seriously concerned over the effect the recent advisory opinion of the Federal Trade Commission will have on the longstanding practice whereby two or more local, small, independent retail stores place joint advertisements, including prices, in newspapers. To be competitive with chainstores, it is absolutely necessary that such ads give prices. I confirm what some previous witnesses have said in that regard, sir.
The announcement of this hearing by Chairman Evins said that the FTC ruling
seems to say that our antitrust laws are blocking the efforts of small, independent businessmen from taking advantage of advertising allowances available to their chainstore competitors.
This is precisely correct and NEA applauds the chairman and this committee for holding this investigation. The welfare of literally thousands of small businessmen is at stake.
NEA's concern is to preserve a practice widely used for many years, and I might interpose here, sir, that I have handled this advertising as long as 30 years ago, both here in Washington and in Charlotte, N.C., where I was national advertising manager of a newspaper. This is to the mutual advantage of our members and their advertisers. If FTC intends to outlaw jointly sponsored price ads in newspapers, we wish to register a strong protest and to urge Congress to prevent this from happening. FTC should encourage small businessmen in their efforts to compete, and not throw a barrier in the way of established trade practices which foster competition.
Whether legislation is required is for legal experts to decide but we endorse the principle of Senator Hubert H. Humphrey's bill, S. 1320. This bill would contradict the FTC advisory opinion, which seems to us to be unrealistic and unwise. We applaud Senator Humphrey for his effort to correct the situation.
Appended to this statement are some typical examples of how small independent merchants-grocery store proprietors-have in a common interest joined to advertise their merchandise to the general public. Several list two or more stores where this merchandise is on sale; others merely identify the group as, for example, "Employee Owned Food Stores."
These were taken from some papers that come to my office regularly. Many of them are sent to me because I happen to be friends of the publishers. One of them is from Clinton, Tenn., sir; one is from a newspaper published by a classmate of mine in college, the Bedford, Pa., Gazette. These are typical examples of advertising that appears in newspapers all over the country. One of them in from Maui, Hawaii.
I will just take the one on top, which is the Bedford Gazette. As I say, I know the paper thoroughly. I am a Pennsylvanian. I have been in all these little towns.
There is a series of names and addresses of grocery stores on the left-hand side. They are the Independent Better Retail Stores.
Many of these are in little crossroad communities in Bedford County, Pa., and in adjoining counties. If this type of advertising is prohibited, those stores will close up, die, and fade away.
The CHAIRMAN. These advertisements which you have there, Mr. Serrill, may be received for the record.
Mr. SERRILL. You may have them; yes, sir, and they are tabulated in the appendix to my statement.
Advertising is a necessary tool for most retailers but the small merchant is unable to afford large-space copy, such as the chains employ. Only by banding together in cooperative advertising can the small independent merchant command the same attention and patronage enjoyed by larger and richer competitors. Cooperative ads, with
the cost shared by a number of stores, make possible use of large space, often full pages.
All of the tearsheets I am offering for the record are in the grocery field. However, the same sort of cooperative advertising is and can be employed by local groups of druggists, hardware dealers, and other merchants. This is not just a food problem-it cuts across the retail field generally, and I think our friend from Norfolk and Newport News. I am certainly shocked, Mr. Chairman, to learn that a full fledged advertising campaign was cut, halted in midstream, though that is a pretty bad way of expressing it, but it was just completely halted and stopped because of this advisory opinion of the Federal Trade Commission.
Mr. MCCULLOUGH. Mr. Chairman, I would like to ask the witness for a definition of the phrase in the last paragraph that has just been read, "local groups of druggists." Would you tell me what you mean by "local groups of druggists, hardware dealers, and other merchants"?
Mr. SERRILL. I would say a group within a county or within a valley or within a contiguous area who would meet together and band together to do a joint promotion of the value of local buying at home or buying within the area, rather than elsewhere.
Mr. McCULLOUGH. The reason I asked that is to give you an idea of how difficult it is to do things that we may want to do here.
I would judge that the witness comes probably from a small community like I do, and the phrase "local groups of druggists, hardware dealers, and other merchants" has the same meaning to me that it does to him.
But you know when you said a group within a county, would that be a group within Cook County, and can you see the difficult problems that face the Judiciary Committee of the House that is given authority and responsibility, or in Queens, N.Y., or in Cayuga County, in my home State, with over a million people? I just bring that out to show what a very difficult problem it is, and, if using a proper legal instrument for local groups of druggists, hardware dealers, retail automobile dealers, and other merchants, how soon we could get into a field that would bring us questions like the questions or the problems resulting from opening Pandora's box.
Mr. SERRELL. Judge McCulloch, I heard, this morning, the difficulty of determining what is small business, and the difficulty of determining the size, how large a hole to drive into the problem.
It is a problem that learned legal minds must study in this instance, and I think it must be studied promptly, because it is already having an adverse effect upon advertising in this area. If I may continue. The CHAIRMAN. You may proceed.
Mr. SERRILL. Small newspapers, of which I am a representative, have a tough competitive fight to survive. They need the advertising support from cooperative ads by retail groups, just as the advertisers need the patronage attracted by their advertising. Certainly it is in the interest of the public that this type of advertising be permitted to continue. It is the advertising dollar which permits a paper to serve the public by communicating the news of the community and the world.
In most newspapers, retail grocery advertising is second only to the department store classification in total volume. Some communi